News from EPI › A national infrastructure bank offers efficient way to fund roads and rails

December 10, 2009

The need to repair and upgrade America’s roads and rails is widely accepted, but the best way to fund these projects is a matter of debate. In a briefing paper, Street Smart: Reforming the Transportation Budget Process, EPI policy analyst Ethan Pollack looks at the benefits and drawbacks of two options for reforming how transportation dollars are allocated to projects: capital budgeting and an infrastructure bank.

Capital budgeting is an accounting concept that spreads the cost of assets over their useful lives, rather than at the moment of outlay. A national infrastructure bank would be a federal financial entity designed to promote a more efficient level and mix of infrastructure investments by operating outside of the normal budgeting process.

“Overall, it is likely that the infrastructure bank would provide investments for much-needed areas of the transportation system, areas that also provide higher investment returns,” concludes Pollack.